Student loan debt is dramatically altering the lives of millions of young Americans. And because student loan debt is one of the few kinds of debt not ordinarily dischargeable during bankruptcy, many struggling graduates are simply defaulting on their loans. In fact, so many young Americans are defaulting on their student loans that the Consumer Financial Protection Bureau (CFPB) is calling for stricter oversight of student loan companies who are taking advantage of defaulting graduates.
The law protects lenders from being taken advantage of by consumers who do not intend to pay back their debt despite an ability to do so. However, the law also generally protects struggling consumers in a variety of ways. At present, non-bank student loan companies are not highly regulated in a consumer protection-focused way. The CFPB's new proposal would change that.
Currently, those struggling with student loan debt are too often the objects of poor customer service, paperwork mishaps, unfair costs and unapplied payments by these companies. Hopefully the CFPB proposal will be embraced with the urgency it requires for the benefit of all young Americans struggling with student loans.
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Source: Huffington Post, "Gov't consumer watchdog wants stricter oversight of student lenders as more borrowers default"